ACC2400 Lecture Notes - Lecture 10: Purchase Order, Information Processing, Credit Risk

• School: Monash University
• Department: Business - Accounting
• Course: ACC2400
• Professor: Kristian Rotaru

Document Summary

Overview of control objectives: controls at managing operational activities or controlling information processing. Operations (general controls: effectiveness of activity how well is it done, efficiency how efficiently are resources used, security of resources data, assets. Custody: handling cash, inventory, tools, other valuable assets. Recording (can combine with reconciliation if only 3 employees: data entry, prepare source dogs (purchase order, journal entry) Reconcile: prepare cash, payable, receivable reconciliations, prepare performance reports. Why separate: recording from reconciling prevents falsification of records, custodial from recording prevents falsification of records, custodial from authorisation prevents authorisation of fictitious transaction, recording from authorisation prevents covering up false transaction. Inaccurate/invalid data entry into master file: unauthorised access to sensitive information, unauthorised disclosure of sensitive information, loss/destruction of master data, poor performance. Inaccurate orders: allowing a non-existe(cid:374)t custo(cid:373)er or a custo(cid:373)er o(cid:374) (cid:858)stop credit(cid:859) to order goods, selling to a high credit risk customer who subsequently becomes insolvent, ordering excess inventory.